Concept and Implementation of CFC Legislation

S. 4181. Overview

The chapter at hand examines the common corporate (consolidated) tax base (hereafter CC(C)TB) proposal initiated and proposed by the European Commission and focuses particularly on the controlled foreign companies (hereafter CFC) rules included therein, comparing this set of CFC rules to the one inserted in the EU 2016/1164 Anti-Tax Avoidance Directive (hereafter ATAD I). The author intends to analyse Articles 7 and 8 of ATAD I and Articles 59 and 60 of the 2016 CC(C)TB proposal seeking to investigate the reasons why two different sets of CFC regimes are introduced in two different legislative tools by comparing the two set of rules and identifying their similarities and differences. Moreover, the author wishes to elaborate further on the possible reasons behind the persistent effort of the European Commission to uproot the erosion of the European tax bases and profit shifting by adopting almost identical CFC rules through two different legislative instruments. The potential conflicts will be presented that may arise in the case of a simultaneous application of both rules. Concluding, some suggestions and proposals are given for the eradication of the mismatches in the c...